Safaricom’s M-Pesa is poised to join the Pesalink network, a move that could significantly reshape Kenya’s digital payments landscape. In a proposal submitted jointly with the Kenya Bankers Association (KBA) to the Central Bank of Kenya (CBK), Safaricom aims to integrate M-Pesa, Kenya’s largest mobile money platform, into the national interbank payment system, Pesalink, which already connects 39 banks across the country.
This integration is expected to dismantle the barriers between mobile wallets and traditional bank accounts, creating a more unified payments ecosystem in Kenya. It could make transferring money between mobile wallets and bank accounts faster and more seamless for millions of Kenyans, effectively bridging the gap between mobile money and the formal banking sector.
Currently, Pesalink, operated by Integrated Payment Services Limited (IPSL), facilitates instant bank-to-bank transfers but does not include mobile money services like M-Pesa. By joining the network, Safaricom would enable M-Pesa users to transact with any bank without the need for separate agreements between banks and mobile money providers. This initiative aligns with the CBK’s broader goal of streamlining payments and fostering financial inclusion through a new Fast Payment System (FPS), which aims to allow smooth cross-platform transactions.
“The majority of the industry is already connected to the IPSL switch with Safaricom M-Pesa set to join the switch soon,” Safaricom and KBA stated in their report. The announcement signals a push towards a more integrated payments infrastructure that supports a wider range of financial products and services across Kenya.
The integration of M-Pesa into the Pesalink network could also be a key component of the CBK’s planned FPS initiative, which will allow instant, low-cost transactions between various financial institutions, including commercial banks, SACCOs (Savings and Credit Cooperative Organizations), and microfinance institutions.
One key benefit of this integration is the potential to reduce transaction costs. Sending money via M-Pesa currently costs significantly more than transferring funds through traditional banks. For example, sending KES 10,000 (USD $77.22) via M-Pesa costs approximately KES 100 (USD $0.77), while bank transfers via Pesalink can be significantly cheaper, with charges ranging from KES 30 (USD $0.23) to KES 50 (USD $0.39).
Ali Hussein Kassim, Chairman of the Association of FinTechs in Kenya, commented;
Integrating M-Pesa with Pesalink would create a more seamless and interconnected financial ecosystem. This would allow users to easily move money between mobile wallets and bank accounts, breaking down the current silos between these systems.
An integrated payments network could make it easier for small businesses to accept payments across different platforms without the need to operate multiple wallets, marking a significant advancement for payments in Kenya.
